Ruas acquire NuVescor to tap into lower middle market

This article was originally published on MiBiz on November 27, 2016.

GRAND RAPIDS — Randy Rua left NuVescor Group LLC seven years ago to break out on his own and launch an M&A firm that focused on working with small business owners.

Now he’s back at the Grand Rapids-based NuVescor as an owner.  In August, Rua and his wife, Tami, bought NuVescor, which focuses on M&A in the lower middle market.

The Ruas own NuVescor together. They have maintained NuVescor’s downtown Grand Rapids office and operate the firm as a separate business from Rua Associates LLC in Zeeland, which Randy Rua formed in 2010.

“It’s a personal investment,” Randy Rua said.

Buying NuVescor enables him to expand into a new market and leverage the strengths of both firms by referring prospects to each other when needed.

“It allows us to have access to a wider range of clients,” he said.

Rua Associates focuses on transactions with a value of $5 million or less and works to educate small business owners and their advisers about what it takes to buy or sell a company. By comparison, NuVescor works with clients involved in larger lower middle-market deals.

Operating the two firms as separate businesses stems from the brand recognition that each has built and their differing structures. It also allows each to focus on its specialty while sharing some back-office administrative functions.

Rua Associates at times lost out on prospective clients whose CPAs or other advisers perceived the firm as too small to handle their transactions. Rua Associates now refers those larger client prospects to NuVescor.

“It’s going to be pretty hard to break that brand perception. If we merge them together, we lose that. And that’s the same thing for NuVescor. They’re not set up to handle the smaller transactions,” Rua said. “If we merge them, it just wouldn’t work. They’re just so different.

“It’s different enough that it made sense to keep different teams.”

Rua Associates, for example, has a staff person who specializes in small business banking to help clients through the process of financing a deal. NuVescor, on the other hand, serves a base of clients in Michigan and neighboring states who typically have that expertise in-house, Rua said.

Since closing the deal a few months ago, both firms have landed clients that otherwise may have gone elsewhere, “so we’re already seeing the fruits of it working,” he said.

Rua worked at NuVescor for two years prior to forming Rua Associates to focus on what he saw as an underserved market. He maintained contact with NuVescor owner Kevin Hirdes. The two often got together to discuss business and Rua said he considers Hirdes a mentor.

As Hirdes began to talk about stepping back from running his firm, they started discussing a possible deal.

“It was time for me to turn the reins over to someone with a passion for doing mergers and acquisition work,” said Hirdes, who formed NuVescor in 2007.

“I wanted to back away from the day-to-day operations of running a mergers and acquisitions business,” he said. “My passion is really building and growing larger organizations in the lower middle market space.”

Hirdes remains with the firm as a managing director, although he expects to reduce his role over time.

Selling but staying involved with the firm gives Hirdes “the opportunity to do some other things now.” He hopes to provide leadership for other companies, whether at a board level or in an advisory role when he can offer operations guidance and invest in businesses.

Rua pursued the deal with NuVescor because he had come to miss working on larger transactions. With strong M&A activity of the last few years continuing in the lower middle market, he saw an opportunity to expand his business holdings beyond working with small businesses.

“I said, ‘I want to go after the bigger market because there’s a lot of opportunity there.’ The lower middle market has become very active in the last two years and right now is very active,” he said. “It wasn’t that way when I formed Rua Associates and I was benefitting from the fact that the small business market was very active, but the lower middle market was very bad at that time.

“Now we’re at a point where that’s really strong and I wanted to participate in that. NuVescor gave me an opportunity to do that.”